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Mesa County workers may borrow from retirement fund

Mesa County employees who may be strapped for cash in this recession soon will be able to take out a loan from their retirement fund under a change approved by county commissioners on Monday.

Commissioners Steve Acquafresca and Janet Rowland agreed to amend the Colorado County Officials and Employees Retirement Association retirement plan to allow employees to borrow against their vested 401(a) account balance. Commissioner Craig Meis was absent from the meeting.

Assistant County Administrator Stefani Conley said county administrators considered permitting the county’s nearly 1,000 employees to borrow against their retirement fund after an employee approached them about a month ago.

“This employee said, ‘I’ve got some critical financial needs. If I could get funds for this, it would help immensely,’ ” Conley said.

Conley told commissioners employees can borrow up to 50 percent of their vested account balance — between $2,500 and $50,000 — for any reason. Employees can take out only one loan at a time.

Loans will be repaid through payroll deductions, with participants charged loan administration and annual service fees. Workers who leave their employment with the county prior to repaying the loan must repay the loan immediately upon their employment with the county ending. Failure to do so will result in Internal Revenue Service penalties.

In formulating its own program, Conley said Mesa County took pointers from Jefferson County, which placed no conditions on employees taking out a loan.

“They just opened the floodgates,” she said, noting that as a result, “They’ve got some employees upside-down in their retirement accounts.”

Conley emphasized that employees should consider borrowing money from their retirement fund a last resort.

“This is not something you would use to buy a snowmobile or take a trip to Hawaii,” she said.

Acquafresca noted there are risks to employees who don’t manage their loans and retirement funds well and asked county staff to provide quarterly updates on the program.

Rowland said she’s more interested in seeing how the program affects the county. She said since it’s employees’ money, they can spend it any way they want.

“I’m not their mother, and you’re not their father,” Rowland told Acquafresca.